What is the Bank of England base rate?
The Bank of England's (BoE) base rate is the UK's most important interest rate. It's set by the BoE's Monetary Policy Committee, and it determines the interest rate they pay to banks and building societies that hold money with them. That then influences the interest rates those banks and building societies set for mortgages and savings accounts.
When the Bank of England increase the base rate, interest rates usually increase as well. This means returns on savings will go up however borrowing might get more expensive.
What is the current Bank of England base rate?
The latest Bank of England base rate is 5.25%. This is an increase of 0.25% of the previous rate and was announced by the BoE on 3rd August 2023. From 1st September 2023 our tracker mortgage rates will increase in line with the base rate.
What rate am I on and how can it change?
You can find the type of mortgage you're on and your interest rate by looking on your annual statement or mortgage offer (whichever is the most recent).
The type of rate you are on will determine how a change in the Bank of England base rate or The Nottingham’s variable mortgage rate (VMR) will impact you.
Fixed rate mortgages
There will be no change to your interest rate. The rate you pay will not change if you are on a fixed rate mortgage. Your interest rate and monthly payments are fixed until the end of your deal period.
If you have a tracker mortgage, your interest rate will go up and down in line with the Bank of England base rate, meaning we’ll be increasing your interest rate from 1st September 2023.
We'll write to let you know what your new interest rate and monthly payments will be, and you'll start paying your new monthly amount from September 2023, on your usual payment date.
With a discounted mortgage, your interest rate is set at a fixed percentage below our variable mortgage rate (VMR) and your interest rate will go up and down in line with changes to our VMR.
If we change our VMR and you are affected, we will write to let you know, explaining your new interest rate and monthly payments.
- Variable mortgage rate (VMR)
Our VMR is not directly linked to the Bank of England base rate, however, we review our VMR following each base rate change. Any changes will be communicated to you and our letter will explain your new interest rate and monthly payments.
- Near the end of your deal?
If you're coming to the end of your current deal, you can switch to a new one. If you don't switch and your deal ends, you'll automatically go on to our discounted variable mortgage rate. We’ll write to let you know your new monthly payments at least 10 working days before this happens.
How to switch mortgage deal?
Find out how you can switch your mortgage deal.
Monthly payment adjustments
Your new payment will be based on your outstanding loan amount, term and your new interest rate. This is to ensure you’ll pay off your balance by the end of your mortgage.
Interest only mortgages
Your monthly payment will be based on your outstanding balance and new interest rate. Your payments will pay only the interest on your mortgage and won’t reduce the amount you owe.
In arrears or on a payment plan?
When we adjust your monthly payments, this won't include the repayment of any outstanding arrears – you’ll need to pay these separately.
If you're already on an agreed payment plan to pay off your arrears, the agreed monthly amount won't be affected by the base rate change.
Are you worried about paying?
Find out how we can help if you’re worried that you’ll struggle with paying your mortgage.
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